News
Wednesday, May 29, 2013
^ Top
1. Follow Gujarat model to manage highways
2. Japan bullet train deal to crown India infrastructure package
3. Mumbai-Ahmedabad rail link plan may be completed by December
4. Rising to the Challenge
5. Five Kochi highways to be upgraded
6. Corporate stress reduction unlikely in FY14: India Ratings
7. Mumbai may get exemption from high rise rules
8. PM says GDP growth will bounce back to 8%; invites Japan Inc to invest in
infra projects
9. We'll meet 88,000 mw target in the 12th plan: Jyotiraditya Scindia
10. Editorial: Bye bye, PPP
11. JNPT to invite fresh bids for setting Rs 9,000 crore terminal
Follow Gujarat model to manage highways
New Indian Express
May 29, 2013
As the UPA government approaches the end of its tenure, India’s roads and highways
sector has hit a roadblock. In the first few months of 2013, two major bidders had backed
out of contracts with the National Highways Authority of India (NHAI) they had won
earlier. They claimed that delays in approvals have led to major cost escalations and have
asked for relaxation in the payment of premiums. During the last financial year, the
NHAI has not received a single bid for building highways in the public-private
partnership (PPP) mode. Many projects awarded in 2011-12 and 2010-11 on this basis
have yet to take off. The situation is so bad that during 2012-13, the UPA government
could award only 24 per cent of its target of 9,500km of road projects.
Driven to desperation, the government has quietly dumped the much-touted PPP model
and decided to revert to the traditional engineering procurement construction contracts
(EPCs), in which the government funds highway constructions through taxpayer’s
money. This is bound to upset calculations of the Planning Commission which envisaged
that PPP projects would account for at least a quarter of the total investments in highway
infrastructure by 2020. Builders attribute their reluctance to invest in highway projects
to delay in land acquisition and environmental clearances.
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As NHAI returns to the EPC mode, fears about quality of roads and crony capitalism are
bound to haunt the highway sector. New Delhi will do well to take a leaf from the Gujarat
government’s management of the highways. Following the Chinese model, it is given
sufficient powers at every level of the decision making and execution process. At the
same time, it has ensured that there is total accountability at every level and has been
taking quick action in case of negligence or wilful default. The state’s highways system
has seen a massive expansion in the last ten years without compromising on quality and
the World Bank has asked other states to replicate the Gujarat model.
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Japan bullet train deal to crown India infrastructure package
MINT
May 29, 2013
India is seen set to use Japanese bullet train technology for a high-speed connection
between Mumbai and Ahmedabad, a report said on Wednesday, the centrepiece of a
huge package of infrastructure sales.
India’s prime minister Manmohan Singh and his Japanese counterpart Shinzo Abe will
issue a joint statement at a summit later in the day giving details on a feasibility study for
the railway, the Nikkei newspaper said.
Abe is to offer a sweetener in the form of ¥101.7 billion in yen-based loans to India,
theNikkei said, as Tokyo fights off competition from nations such as France, which has
the TGV high-speed rail network.
Japan under Abe is embarking on a renewed drive to sell roads, rail and power stations
to emerging nations, including India, in a bid to offset lassitude in the domestic economy
that has left it treading water.
Earlier this month, Abe pledged he would travel the world on behalf of Japan Inc. and
said he wanted to treble sales of Japan’s well-respected infrastructure projects to ¥30
trillion a year.
The Mumbai-Ahmedabad rail line would stretch 500km at a cost of up to ¥1 trillion, the
Nikkei said, adding the two governments plan to finish technological reviews and
costings by March 2014.
Abe was also expected to offer around ¥17.7 billion to India to build a conference hall
and other facilities at the Indian Institute of Technology in Hyderabad, along with
around ¥13 billion for the Tamil Nadu government, the Nikkei said.
The pledges will come on top of a March offer of a ¥71 billion loan towards the
construction of an underground rail network in Mumbai.
Japanese media have said the two sides will agree on drafting a master plan for new
infrastructure in southern India, which could see Japanese know-how used to build a
power grid, roads, railways and ports around Bangalore and Chennai.
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The sales boom comes as the two countries eye the rise of China with increasing unease
as Beijing presses territorial claims with growing insistence.
Singh on Tuesday called for the shoring up of military and security ties, Kyodo News
said, stressing the commonalities between Tokyo and Delhi.
“We should intensify our political dialogue and expand our strategic consultations on...
issues of mutual interest,” Singh said in a speech, adding that defence and security
dialogue, military exercises and defence technology collaboration should also grow
between the two countries, according to Kyodo.
Singh stressed that Japan is the only country with which India has held a “two-plus-two”
meeting of foreign and defence ministers, Kyodo said.
Media reports earlier this week said Japan was expected to sell amphibious planes to
India in what would be the first sale of hardware used by the Japanese military since a
weapons export ban was imposed in the 1960s
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Mumbai-Ahmedabad rail link plan may be completed by December
MINT
May 29, 2013
In what may help India achieve its ambitious plan of setting up high-speed railway,
French state-owned railway company SNCF plans to complete a study for the 450 km
Mumbai-Ahmedabad link in December.
The study, which started in January, is being conducted in three phases on this stretch
and was commissioned after the Indian Railways requested for the €33.8 billion SNCF’s
support. While the Indian Railways has made its experts available for the joint study
along with Systra, an SNCF subsidiary, the French government is financing the study
with a grant of €600,000. The other partner in the consortium doing the study includes
Arep, another SNCF subsidiary.
To be sure, after the completion of the study, it will be upon Indian Railways to go ahead
with the project and bid it out. The country has already established the High Speed Rail
Authority of India (HSRA) for operationalising the project.
“This line is to compete with the airlines. The questions that the study aims to answer are
of speed, customer base and stops. We are looking at revenue considerations and a
business case for the project. We expect the study to be completed by the end of this year
or by the beginning of next year,” said Philippe Lorand, senior vice-president, business
development, major international projects, at SNCF.
A pre-feasibility study has been conducted. Vinay Mittal, chairman of Railway Board
recently visited France for discussions on the project.
“SNCF is working on operating a high speed network in India,” said Jojo Alexander, vice
president, strategy for transport, Alstom Group.
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A panel led by Sam Pitroda, chairman of the National Knowledge Commission on
Railway modernization, has said that the Indian Railways needs to look at 15 focus areas
that include partnership with private firms, state of tracks and bridges, signaling, rolling
stock, stations and terminals, dedicated freight corridors, high-speed trains, land use,
safety, and information and communication technology.
“The Mumbai-Ahmedabad corridor was chosen for the study as it had the maximum data
available. It is the most advanced corridor in India,” said Lorand, while declining to put a
value to the cost of the project citing a confidentiality clause.
Apart from operating France’s rail transportation, SNCF runs TGV, the high-speed trains
that run at a speed of 320 km per hour.
“We would be keen to bid for this project. We are also open to partnering with another
firm for this project,” added Lorand.
Explaining the rationale for SNCF looking at India for business, Lorand said, “The
growth in Europe is slower than it usd to be. All companies are looking out. Asia makes
sense at a global level.”
For a project of this scale, it would take around 10 years for commissioning. The business
case for high-speed trains have been established for a distance ranging between 500km
to 1000km. Some of the countries were high-speed trains operate are Japan, South
Korea, China and Spain. In comparison, the fastest Indian train is the Bhopal Shatabdi
link with a top speed of 150 km per hour.
In response to a question about the allegations of graft in the Indian Railways in the
wake of the resignation of former railway minister P.K. Bansal and its impact on such
projects, Lorand said “I am not worried. It is for the good of a country that things are
cleared up.”
India is also building freight corridors to improve efficiency in moving goods across the
country and help businesses expand their markets by creating better infrastructure and
plans to construct 725 km new lines with an expenditure of Rs6,872 crore in the current
fiscal year.
^ Top
Rising to the Challenge
Constructionweek.com
May 29, 2013
Equipment manufacturers are gearing up with advanced machines to meet the demands
of India's road building sector
Although the pace is currently punctuated by procedural hurdles and slowdown, India’s
roads and highways story is far from over. As the country ambitiously plans to lay
massive number of new roads and rebuild the old ones to match its projected economic
growth, it has thrown open new opportunities for construction equipment
manufacturers. But are we adequately equipped technologically to take up so many road
projects? Industry observers feel that although India is already manufacturing a variety
of road construction equipment (indigenous as well as in collaboration with reputed
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global manufacturers) manufacturers still need to invest a better portion of their budgets
in R&D to build world-class roads. “We have to adopt new technologies that will not only
help in terms of accuracy, improve quality of output but also reduce the cost of
construction,” says Pravin Thakur, VP, plant & machinery, SPML Infra.He says there is
huge potential available in Indian market for indigenous and global players to promote
their products in the field of latest survey technology; soil stabilisation, asphalt mixing
machines and cold mix asphalting. SPML Infra is currently executing road projects
worth Rs1,400 crore for a total road length of 510.5 km in the state of Bihar, Madhya
Pradesh and Rajasthan.
Equipment manufacturers say that the primary issue facing the road sector today is not
the lack of technologically advanced construction equipment, but constant delays in
execution of projects already awarded. “As far as equipment is concerned, we have world
class products already available in India. For example, 320D hydraulic excavators or
120K2 motor graders, which have the ability to complete jobs at the highest levels of
quality, in the shortest time and at the lowest cost per km of road built,” says Gurman
Reen, sales manager for Caterpillar India.
Global equipment manufacturers who are present in India say they have come a long
way in terms of offering quality products. “In the previous era, when we used to have
licensing agreement, manufactures used to sell old technologies, but that era has gone
away. Now all international companies either have invested themselves or formed joint
ventures to give the right technology to Indian customers," says AM Muralidharan,
president, Volvo Construction Equipment. Now, global manufactures develop products
keeping the local condition in mind but maintain the same quality. Italy-based Case
Construction, for example, says its loader backhoes and compactors are domestically
manufactured keeping in mind international quality standards.
However, it directly imports other products such as skid steer loaders, wheel loaders and
motor graders. “We can safely say that our products are at par in terms of quality with
machines available in the developed parts of the world,” says Anil Bhatia, director sales
and marketing, Case India.
Also, with the initiation of BOT/BOOT models in roads, there is increased emphasis on
quality and longevity of roads. There has been a constant and accelerated shift to more
productive and advanced equipment across the board in India. “While we might not be at
the same levels of equipment utilisation as the developed world, the trend has been
extremely positive and encouraging. The key lies in partnering with our customers to use
the 'right tool for the job' and improve overall jobsite efficiency,” says Reen.
But India is a price sensitive market where operator’s comfort comes last and that could
lead to compromise on safety and quality. In order to curtail the price of the equipment,
Pavin Thakur says, Indian manufacturers go easy on safety and quality parameters. “But
we must understand that operator’s comfort play an important role in extraction of
maximum output from the equipment,” he says, adding that his practical experience
suggests that better quality equipment gives up to 10 per cent extra output from the same
equipment than those without such features. Thus, in long run, the cost of extra
investment is not only recovered but the profitability also goes up due to longer
durability of better quality equipment.
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Vivek Soni, Co-CEO and CFO, Gemini Equipments & Rentals, agrees: “We go for
accepted standard because we will be able to use the machines only for eight to 10 years.
When the equipment is in breakdown, I won’t be able to give it on rent. So I would rather
spend little bit extra but get the established leader, which is known for its quality."
Global players like Caterpillar, Case, Wirtgen and Volvo, say they would never
compromise of safety or quality. For example, Cat says all its products are equipped with
state-of-the-art operator stations, which place utmost importance on operator safety,
comfort and ease of operation. “The operator is one of the biggest influencers on
production, fuel burn, up-time and machine life. We understand this well and would
never compromise on safety or quality of an operator,” says Reen, adding that their
dealers offer onsite certified operator training for each and every machine they sell.
The L1 tendering model is not conducive to the use of advanced road-building equipment
as contractors focus on constructing roads in the lowest possible cost. Contractors do not
want to invest in latest technology as they do not see much business sense in buying
high-end equipment to use in projects that are awarded to the lowest bidder, with no
regard to quality of materials and construction. However, not choosing to invest in the
latest and most efficient machines will only serve to be counterproductive for
contractors. They must make themselves more competitive by adopting technology that
lowers their cost and improves productivity.
Case India’s Bhatia says: “In a resource-constrained environment, optimal utilisation of
resource takes top-most precedent. The use of better technology helps in lowering the
overall costs.” He reckons that the winners would be those companies who meet these
expectations.
^ Top
Five Kochi highways to be upgraded
News Indian Express
May 29, 2013
Five of the state highways will be converted into National Highways and the state has
already sought the Central Government aid in this regard, said PWD Minister V K
Ebrahim Kunju. He was addressing media persons after the PWD monthly review
meeting here on Monday. Bodimatt-Kundanoor (168 km), Kollam-Kazhuthuruty (81
km), Kozhikode-Palakkad (126 km), Kozhikode-Muthanga (118 km), Kollam-Thenni (
191 km) highways will receive the National Highway status. The minister said that the
PWD will take up the work of converting these state highways into national-level
highways.
“Earlier, we had decided to entrust the NHAI with the project and had also signed an
MoU with them. However, the NHAI authorities had said that they would need to
acquire at least 45 meters if they needed to convert the state highways into National
Highways,” he said. Since this will bring up a lot of public agitation, the State
Government decided to take up the project so that the conversion can take place without
any land acquisition. Also, if the NHAI takes up the work, toll will be charged from the
public, the Minister said which will only be a greater burden for the public. These state
highways will be converted as two-lane NHs, he said.
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Meanwhile, the work of widening the NH 17 has already started. “ There are stumbling
blocks at Kollam in terms of land acquisition for the widening of the highway. However,
we hope to solve the issue soon,” the Minister added. The widening work of NH 17 is also
being taken up, he said.
Asked whether the DMRC will keep out of implementing the monorail projects at
T’Puram and Kozhikode, since they have declared that they will only implement Delhibased projects, he said that DMRC will not be backing out since already a contract has
been signed. “ An MoU has already been signed in the presence of E Sreedharan, DMRC
officials and the state government officials.
Hence, the project will be implemented by them,” he said. The Minister announced that
Madhavan Pillai has been appointed as general manager of the Monorail Committee
whereas Shivadutt and Anand Elammana has been appointed chief engineers of the
T’Puram and Kozhikode monorail projects.
^ Top
Corporate stress reduction unlikely in FY14: India Ratings
Moneycontrol.com
May 29, 2013
India Ratings & Research (Ind-Ra) expects corporate credit stress for FY14 to be at levels
comparable to FY13, under its base-case. However, in a stress case scenario, the levels
could be significantly higher and are likely to be driven by 22 corporates.
India Ratings (Ind-Ra)'s sector-specific outlook has provided substantial early warnings
with respect to corporate stress levels. The agency's corporate sector credit outlook for
2013 covers 22 sectors, including infrastructure. For the purpose of this analysis, the
sector-specific outlook is mapped to the outstanding industrial loans of the Indian
banking system.
Around 30 percent of the industrial loans in Indian banking belong to the sectors which
are on a negative or stable-to-negative outlook. The proportion of industrial loans in
sectors with a negative outlook shot up in 2012 to 28 percent of outstanding credit (2011:
6 percent). Gross NPA rate increased to 2.8 percent in FY12 (FY11: 2.3 percent),
subsequently rising to 3.7 percent in Q3FY13.
Apart from these 22 large corporates, the overall quality of industrial loan assets in FY14
will be driven by the current status of the industry and impact of the six ‘Risk Radar'
factors identified by Ind-Ra. The factors are a) foreign exchange, b) investment in preelection year, c) possible benefits of commodity price correction, d) domestic private
consumption, e) interest rate transmission and f) export levels. The single most
important factor limiting corporate stress level at the FY13 levels is the assumption that
the INR/USD exchange rate will remain between INR53/USD to INR56/USD. If the
rupee depreciates (for a sustained period) significantly above the INR56/USD level,
gross NPA levels may shoot increase significantly above the FY13 levels.
Global risk aversion may be creeping up, as signalled by a rise in sovereign credit default
swaps spreads. A further rise in global risk aversion, driven by a possible curtailment of
quantitative easing, may severely impact the INR/USD exchange rate. Enhanced risk
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aversion in the past has often resulted in a reduction of exposure to emerging market
assets by global investors. Given the sovereign's higher dependence on forex inflows to
fund the current account deficit, any such scenario may potentially depreciate INR to
unseen levels. In such a scenario and given the impending volatility which comes with it,
corporate stress level may be significantly higher than the FY13 levels.
^ Top
Mumbai may get exemption from high rise rules
Business Standard,
May 29, 2013
The Planning Commission has asked former Isro chairman K Kasturirangan to review
the city's case
High rise building projects in India’s commercial capital Mumbai might get a breather
from the ministry of environment and forests (MOEF) guidelines linking height of the
building with a width of a near-by road and a distance from fire station.
The Planning Commission has asked former Indian Space Research Organisation (ISRO)
chairman K Kasturirangan to review the city’s case and suggest whether it can be
exempted from the rules, officials said.
The MOEF's guideline had made environmental clearance to any high rise buildings in
places where it does not have a road of minimum width along with it difficult. The
guidelines linked the height of a building to the width of the road. For instance, a
building of over 60 metres has to have a road with minimum width of 30 metres.
The criteria were based on guidelines released by MoEF through its office order dated
July seven last year. The guidelines also require the high buiding projects to have a fire
station within a stipulated distance. For instance, a building of over 60 metre height
must have a fire station within two km. The desirable thing, the guidelines say is that the
fire station should be within 10 minutes of driving distance.
Builders alleged that the guidelines not only delayed environmental clearance for
projects, but also escalated their costs manifold leading to a upproar by the country’s real
estate sector.
New constructions in Mumbai were particularly affected as most of the buildings failed
to adhere to the 30 meters wide road norm because of paucity of space.
After the guidelines, industry representatives approached the Prime Minister’s Office. As
such a committee was appointed to review the guidelines. That committee was also
heded by Kasturirangan.
The Committee submitted its report to the MoEF a few months back. However, it has not
been made public yet. Representatives from the Confederation of Indian Real Estate
Developers’ Associations of India (CREDAI), the apex body for private Real Estate
developers in India, too were part of the Kasturirangan committee.
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Maharashtra Chief Minister Prithviraj Chavan in his recent discussion with Planning
Commission deputy chairman Montek Singh Ahluwalia had raised the issue of granting
exemption to Mumbai from the MoEF guidelines.
“We have made representations to the Kasturirangan Committee based on data collected
from 4-5 states and have said that the entire issue of environment clearance should be
looked into by local authorities and once we get the clearance there should not be further
requirement of clearance,” C Shekhar Reddy, vice president of National Executive
Committee of CREDAI told Business Standard.
He said the real estate industry is not against environmental clearances, but it should not
take years to get one single clearance. Some industry officials said that to get a
Environmental Impact Assessment clearance on an average takes around 20 months in
Maharashtra, a year in Madhya Pradesh, 10 months in Punjab and eight in Kerala.
Reddy said even the Finance Minister was apprised of the delay in environmental
clearance for real estate projects which prohibits industry players from accessing bank
loans.
Officials said the environment ministry is of the view such guidelines was necessary
keeping in view the safety and security of the residents.
Minimum width of the road (Right of Way)
Height of building
Sr. No.
Width of road (right of way)
Minium
Desirable
1
Between 15 meters to 30 meters
15 meters
18 meters
2
Between 30 meters to 45 meters
18 meters
24 meters
3
Between 45 meters to 60 meters
24 meters
30 meters
4
Above 60 meters
30 meters
45 meters
Note: The guidelines also said that all buildings more than 15 meters height should have all necessary fire fighting
equipments before occupancy
Location of Fire Station
Sr. No.
Height of building
Location of fire station
Minimum
Desirable
1
Between 30 meters to 45 meters
Within 10 kilometers
Within 05 kilometers
2
Between 45 meters to 60 meters
Within 05 kilometers
Within 02 kilometers
3
Above 60 meters
Within 02 kilometers
Source:
Within 10 minutes of
driving distance
Guidelines for high rise buildings as detailed by Ministry of Environment and Forests
^ Top
News
PM says GDP growth will bounce back to 8%; invites Japan Inc to invest in
infra projects
PTI,
May 29, 2013
"Our people have tasted benefits of rapid growth and they will not settle for less. I want
to assure you that our government is committed to taking hard and difficult decisions in
the long-term interest of our economy" - Manmohan Singh.
Prime Minister Manmohan Singh on Tuesday expressed confidence that the economy
will return to the growth path of 8%.
Inviting Japanese investments in the infrastructure sector, he told captains of the
industry here that a target of $1 trillion has been set for the sector in the 12th Five-Year
Plan (2012-17), and hoped that Japanese businessmen will pick up a large share of these
opportunities.
"Our people have tasted benefits of rapid growth and they will not settle for less. I want
to assure you that our government is committed to taking hard and difficult decisions in
the long-term interest of our economy," he said at a meeting of the Nippon Keidanren,
the premier chamber of commerce and industry.
The 5% growth witnessed last year should be seen as a 'temporary slow down', he said,
adding "the Indian economy grew at an average of 8% per year over the past decade.
"The economic fundamentals which made that possible are still intact. We are confident,
therefore, that we can return to the growth path of 8%."
Investment incentives
The Prime Minister also assured business leaders that India would be taking more steps
to attract foreign investments. "We have taken tangible steps to enhance incentives for
investments. We have liberalised foreign investments in areas like multi-brand retail,
power exchanges and civil aviation and further rationalisation and simplification is being
planned. We have introduced further reforms in the financial markets," he added.
On a mission to woo Japanese investors, Singh said the present bilateral trade of $18
billion does no justice to the enormous potential that exists between the two countries.
The prime minister faced some searching questions from the Japanese industry which
sought improvement in tax regimes, further easing of priority sector lending rules to
expand financial services, and allowing opening of foreign bank branches in
metropolitan cities.
GST Challenge
Singh said that the long-awaited Goods and Services Tax (GST) regime, which is facing
hurdles from states, will be in place in an "appropriate type" by 2014.
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Elaborating on GST, Singh said, "India is a federation and there are difficulties to bring
states to agree to surrender tax power but I am confident we will overcome the hurdle."
The GST has been facing opposition from several non- Congress states which have
accused the Centre of trying to encroach on powers of the states and that such a move
would hit their finances. "So, I cannot say we can deliver tomorrow, but if you ask me by
2014 once elections are out of the way, whichever government is, there will be a general
agreement of appropriate type in place to help propel India's growth story," he added.
The Prime Minister said as a result of a number of steps to revive the Indian economy,
the government expects the growth rate in the current fiscal (2013-14) to be much better
than in the previous year, hopefully around 6% or so. Indian economy in 2012-13
recorded a growth rate of 5%, the lowest in the decade. Singh also informed that the
Reserve Bank of India (RBI) had indicated that it would start the process of issuing new
bank licences.
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We'll meet 88,000 mw target in the 12th plan: Jyotiraditya Scindia
ET Bureau,
May 29, 2013
Fuel availability, financial strength of discoms and transmission are issues occupying the
mind of Power Minister Jyotiraditya Scindia. The minister, who also wears the hats of
chairman of BCCI's financial committee and member of disciplinary committee, tells ET
that he is not the right person to comment on controversial issues like whether BCCI
president Srinivasan should quit or not. Excerpts:
How has your experience been with the advisory committee that consists of
stakeholders in the power sector?
We got comments from the advisory committee on hydro, gas and coal and we are
working on those inputs. It's a very healthy process of to and fro-looking for inputs from
advisory committee and working on it and reverting to them as well. There has to be a
spirit of partnership with the private sector and the public sector and all stakeholders to
ensure selfreliance in power becomes a reality.
Therefore I am interacting with all stakeholders including the banking community,
advisory group, consultative committee which I met for the fourth time in the last five
months and other institutions such as state power ministers' conference and forum of
regulators on a regular basis. It's been a very rewarding and healthy experience both
ways, I hope.
How are you proceeding with new bidding norms for power producers?
The bidding documents in case of power stations to be set up at a specified location and
operating on specified fuel is done. We have discussed with the advisory committee and
it is pretty much final now.
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We are looking for a date for inter-ministerial consultations and to put it up to the eGOM
(for its nod). We are progressing on bidding system that allows bidders to choose fuel
and location. But it may take slightly longer.
What is the future of coal price pooling?
It is no more price pooling. It is pass-through mechanism now. We are looking at a whole
group of 78,000 mw, which is destined to come on stream in 12th Plan. It includes
60,000 mw of projects with firm fuel linkages, upcoming 7,000 mw and also tapering
linkages for 11,000 mw. On Wednesday, I am meeting the finance minister to discuss
coal regulator as well as pass-through mechanism.
Where do you stand in the tussle between NTPC and Coal India?
I am for fairness, transparency and accountability on both sides. Both Coal India and
NTPC are Navratnas. I believe that through the process of dialogue and interaction this
needs to be resolved. I also believe most issues have been resolved and I think we are on
the path of progress. There is an impression of differences between coal and power
ministry. As I told you the most issues are resolved. Both the issues of quality and pricing
have been resolved, pretty much.
Will you be able to meet capacity addition target set by the Planning
Commission?
I am very confident because Planning Commission has set a target of 88,000 mw for
12th Plan, which means adding 17,500 mw per annum over five years. In 2012-13, we
had an internal target of adding 16,500 mw but we achieved almost 20,500 mw, which is
the highest capacity addition (in a single year) in the history of our country. If we are
able to do this for the next five years, then we should be able to meet that target of
88,000 mw.
But, the key issue for me right now is to resolve the current issues with regard to fuel
availability, financial strength of discoms and transmission issues. Once we are able to
resolve these issues, then we can attract more investment in private sector.
What is the status of the financial restructuring of discoms?
The financial restructuring plan is totally finalised. We have eight states including
Andhra Pradesh, Rajasthan, Tamil Nadu and Kerala on board with short-term exposure
of almost Rs 1.35 lakh crore out of total Rs1.90 lakh crore (debt of Indian discoms). Now
they are negotiating with their individual banking relationships. I believe that Tamil
Nadu has pretty much finalised its loan. Other states are following suit. So from the
central government's point of view it is all done. Now, every state will have to tie up for
funds.
What is your stand on N Srinivasan saying he won't resign?
Unfortunately I have been in MP for the last five days and just returned late on Saturday
night. I am getting briefed on it as we go. But I think working committee is looking at it.
The working committee and the IPL committee need to look at it.
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I am on the discipline committee and chairman of finance committee. I am going to
restrict my comments to the areas and domains in which I have active participation.
^ Top
Editorial: Bye bye, PPP
The Financial Express,
May 29, 2013
While the PMO has asked the Planning Commission to come up with a framework for
dispute resolution in PPPs, it is important to keep in mind the shift taking place from
PPP in the classic sense that, instead of the risk being taken by the private entrepreneur,
it is being transferred to the buyer. Reliance Power, for instance, had a 600-MW plant in
Butibori in Maharashtra which was the quintessential private sector project—the
company had got the land from the government and won the bid to set up a power plant
to supply to industry in the area at a fixed price.
With industry not buying the electricity produced, group firm Reliance Infrastructure
applied to the Maharashtra electricity regulator to be allowed to buy electricity from
Reliance Power at a regulated or cost-plus rate—the price risk will now be borne by
Reliance Infrastructure’s customers. In Uttar Pradesh, as FE reported, the Lanco-owned
1,200-MW Anpara C was based on a bid where Lanco would supply power at R1.91 per
unit. With the Uttar Pradesh power companies not buying electricity at even these rates,
the project was terminated and the state now plans to take over the plant—its tariffs will
now be regulated by the regulator based on actual costs and so will likely rise. Needless
to say, the price risk will be borne by consumers across the state.
In the highways sector, while 2012 ended with the National Highways Authority of India
(NHAI) giving out 33 projects for 4,624 km on PPP bids and, instead of NHAI paying out
R3,400 crore on an NPV basis as viability gap funding—as it expected—it got bids with
the winning concessionaires offering to pay NHAI R19,000 crore on an NPV basis. Over
the last 5 months, however, with economic conditions worsening and traffic projections
made earlier looking unrealistic now, developers are looking at renegotiating the
projects. As a result, new road projects, increasingly, are being given out on a
engineering, procurement and construction (EPC) basis with, once again, the project risk
being transferred away from the developers.
Given this reality, the government needs to come up with a solution. EPC or cost-plus
type of solutions are not the most efficient way to build infrastructure. EPC projects take
longer to build and encourage a lot more government interference—witness the
problems in the RIL KG-D6 gas blocks, with government permission required for each
purchase. In which case, the government’s options are to look at renegotiating existing
PPPs or letting developers walk away. While it can be no one’s case that a change in
market conditions is a force majeure event, perhaps a market fluctuation beyond a
certain limit can be seen as a trigger for certain concessions or for a renegotiation.
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JNPT to invite fresh bids for setting Rs 9,000 crore terminal
ET Bureau,
News
May 29, 2013
Global container operators and domestic port operators are making a beeline to
participate in the construction of a container terminal valued about Rs 9,000 crore at
Jawaharlal Nehru Port Trust (JNPT) in Mumbai.
JNPT is expected to invite bids for the project next week and the trustees of the port will
meet on Wednesday to take a decision on the bids. The board is also expected to finalise
to split the project into two. "The bids are expected to be invited soon. We have lost a lot
of time and a decision will be taken tomorrow after the board meeting," a spokesperson
for JNPT told ET.
The fourth container terminal at Jawaharlal Nehru Port Trust has been delayed by more
than three years. One of the largest container terminal in the country, it can handle more
than seven vessels at a time and is expected to be revenue churner. Companies looking to
participate in the project include Dubai-based DP World, Maersk-operated APM
Terminals, Adani Ports, Essar PortsBSE -5.48 % and Larsen & Toubro.
The fourth terminal at JNPT will have a capacity of 4.8 million teu and a berth of 2 km in
length which will make it one of the largest in the country.
The project is expected to reduce the capacity constraints at the port as it operates at
more than 100% of its capacity according to JNPT former chairman L Radhakrishnan.
The Union shipping ministry is also looking to award the project at the earliest as it has
been delayed by more than three years after a consortium of Port of Singapore and ABG
Ports backed. The consortium had outbid others then by offering to share more than
50% of the revenue to JNPT.
The consortium then backed out citing various reasons which included ABG's decision to
move out of the project and the port was then forced to invite fresh bids for the project.
Senior officials at the port also told ET that the companies decided to back out of the
project after realising that the revenue share offered was very high.
Companies are now expected to be more frugal while offering a revenue share to the
port. "This time, we expect competitive bidding. PSA had offered exorbitant rates the last
time bids were invited and the port decided to go ahead with it without even considering
the quality of work done by others", said the MD of a leading port operator in the
country.
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